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ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp, has submitted a USD 10 billion integrated proposal to Iran for developing the Farzad-B gas field in the Persian Gulf and shipping the gas to India.

A consortium of OVL, Oil India Ltd and Indian Oil Corp had discovered the 12.8 trillion cubic feet of gas reserves in the Farsi block in 2008. The discovery was named Farzad-B.

“In April, we met in Iran and as per discussions, we have worked out a fully integrated proposal and submitted to Iranian authorities,” OVL Managing Director Narendra K Verma told reporters here.

Iran, he said, had asked for a plan for developing the field as well as options for taking the gas.

“Fully integrated proposal with lots of options has been submitted,” he said, adding that OVL has invited Iranian officials to India for discussions on the proposal.

Gas produced from the field can either be converted into LNG by freezing at sub-zero temperature and shipping in cryogenic ships to India or transported through a pipeline – either overland passing through Pakistan or sub-sea.

Iran and six world powers in July sealed an accord to curb the Islamic Republic’s nuclear programme in return for ending sanctions, opening prospects of Indian investments in the Persian Gulf field.

Indian firms had so far shied away from investing in Iran for the fear of being sanctioned by the US and Europe.

OVL in August/September 2010 submitted a revised Master Development Plan (MDP) for producing 60 per cent of the 21.68 trillion cubic feet of in-place gas reserves but had not signed the contract because of threat of being sanctioned by the US which is against any company investing more than USD 20 million in Iran’s energy sector in any 12-month period.

Iran, in February 2012, issued a one-month ultimatum to the OVL-led consortium over the development of a gas field.

For more than two years, it did not carry out the threat of cancelling allocation of the Farsi block to OVL.

To pressurise India to act, Tehran last year put the field on the list of blocks it wants to auction in future. It has, however, not yet cancelled OVL’s exploration licence for the Farsi block which gives it the right to develop the discoveries it has made.

Verma said since Indian companies had made the discovery, they naturally had the first right to develop them.

“They had asked for a development plan and as also a plan on how the gas produced is to be used… we have submitted an integrated proposal to them,” he added.

Iran, he said, has given a draft contractual regime under which Indian firms have to operated.

OVL and IOC hold 40 per cent interest each in Farsi block, while the remaining 20 per cent is with OIL.